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Business newsJapanese Interest in St. Petersburg Increasing
09.07.2004 14:31

By Mayura Koiwai

Special to the St Petersburg Times

Photo by Natasha Danchenkova / SPT

Japan's Consul General in St. Petersburg, Terumi Muramatsu, has been posted to Russia's cultural capital twice. Luckily for him, it is one of his favorite cities. Muramatsu says that he has seen St. Petersburg and its residents transform since he first came here in 1991.

As Russia's economy and society have become more stable, Muramatsu says that prospects for business, trade and travel between Russia and Japan are looking up. However, he emphasized that bilateral relations still have a long way to go, and an ongoing territorial dispute over the Kurile Islands has been an obstacle to deeper understanding between the two Pacific neighbors.

"Japan and Russia haven't maximized each other's potential," Muramatsu said. Russia and Japan are both large economies and Russia has natural resources like oil, natural gas and mineral resources which make it a very good trading partner for a country like Japan which has very limited resources, he said.

Trade volumes and levels of travel between the two countries remain low. Muramatsu said that Japan's trade with Russia is 40 times lower than Japan's trade with the U.S. and 20 times lower than its trade with China and the EU.

Travel between Japan and Russia is 65 times lower than travel between Japan and the U.S., and 30 times lower than travel between Japan and China.

Muramatsu said that there were various reasons why economic relations between the two countries was not better developed.

"Russians don't know much about Japan's economic situation or its companies," he said. "Equally, people in Japan don't know a great deal about Russia. I don't think mutual economic cooperation will progress unless there is more information exchange between the two countries."

"When the Russian Federation was established, various Japanese companies, together with Russian counterparts, established joint ventures," he said. "This required Russians and Japanese companies to cooperate with each other, and this didn't seem to work well." He added that after the financial crisis in 1998, many Japanese companies in Russia suffered large financial losses.

Muramatsu said that the language barrier is a big problem, arguing that it is difficult to do business in Russia without knowledge of Russian language. He added that the situation is changing though, as knowledge of English among younger Russians improves.

Muramatsu said that Japanese companies have had problems with Russia's legal and tax systems, because the systems were not well established and were not transparent, although he said that the Russian government recognized these problems and was making efforts to improve the situation.

"The Russian economy is in a good state," Muramatsu said. Russians are gaining purchasing power and Russian companies that would make good partners of Japanese companies are emerging, he said.

"There is potential to develop new technology by conducting joint research projects together with various research institutions," he said, adding that St. Petersburg is an excellent base for these kinds of activities.

"St. Petersburg is Russia's main academic and industrial city," he said. "Its economic infrastructure is organized, its academic level is high, and quality of its labor force is high."

However, Muramatsu said that the dispute between Russian and Japan over the Kurile islands, north of Japan, is still a difficult issue for the two countries.

A peace treaty on this issue will remove the psychological barrier that currently exists between Japan and Russia, he said, adding that Japan will be able to cooperate with Russia on a larger scale when this problem is solved.

Muramatsu said that while a concrete resolution has not been reached, Japan and Russia are continuing to have bilateral talks at various levels.

Muramatsu, who has worked and traveled in countries as diverse as Afghanistan and Hungary, first served as Japan's Consul General in St. Petersburg from 1991 to 1995. He was then posted to the U.S., spent some time working Japan, and then returned to St. Petersburg in 2002.

"You can really enjoy culture and the arts in this city," he said. "Coming into contact with those things as part of your daily life is interesting and is a great learning experience."

"When I came here, about two and half years ago, I thought this city hadn't changed," he said. "But, now, when I walk around, I can feel that it has changed: the streets, shops and window decorations really look very beautiful now."

"Also, the people you see on the street seem to be more easygoing," he continued. "In 1991, it was a period of great economic turmoil, and when I went to the shops, there was nothing to buy.

People used to walk around with a sense of urgency, while now they seem to be enjoying their lives more."

Russia's economy and society are in a much better state than they were back in the early nineties, he said.

"Every place I've been assigned to has had its own culture, lifestyle and customs," he said. "I'm glad that I've been able to come in contact with different cultures. Of course, this might have been possible by reading books and doing other things in Japan... but it's always different from what you feel when you actually live in or travel to a place. I'm also glad that I've been able to interact with people in different countries to achieve mutual understanding."

Muramatsu said that he had much to do to achieve better Japan-Russia relations.

"My ideal diplomat is a person who understands the interests of the country which he or she represents and who works for them," he said.

"This work is endless, but rewarding," he said. "For example, meeting Russians, listening to their ideas and explaining the Japanese perspective is an ongoing task."